R3,6 billion agreement to boost SMME funding

Business Writer

THE African Development Bank Group and Standard Bank Group on Monday signed a landmark financial agreement to enhance funding for small, medium, and micro enterprises (SMMEs) and expand trade across Africa.

The agreement includes a R3,6 billion investment in a social bond and a $200 million Risk Participation Agreement (RPA) for Standard Bank of South Africa Limited (SBSA).

The initiative strengthens Standard Bank’s lending capacity, ensuring greater access to finance for SMMEs, a critical driver of economic growth and job creation in South Africa.

The social bond investment promotes inclusive economic development, particularly for SMMEs with a turnover below R300 million and loan sizes under R40 million.

This financing will support up to 4,000 businesses, helping them scale operations, create jobs, and contribute to economic resilience.

Kenny Fihla, who is Standard Bank Group’s deputy chief executive officer welcomed the investment, stating: “This landmark partnership strengthens our ability to support SMMEs, the backbone of South Africa’s economy. With approximately 3,2 million SMMEs accounting for 60 percent of jobs, ensuring access to finance is crucial.

“This initiative aligns with our Sustainable Finance Framework and our commitment to financial inclusion.”

In addition to the social bond, the $200 million RPA enhances trade finance across Africa, focusing on low-income countries and transition states.

The agreement enables local banks to increase lending by sharing risk, bridging the trade finance gap, and promoting intra-African trade.

Leila Mokaddem, director general for Southern Africa at the African Development Bank, highlighted the broader impact: “This collaboration marks a significant milestone in our long-standing partnership and is a testament to our shared commitment to supporting SMMEs’ growth and enhancing trade finance across Africa,” she said.

“Expanding financial inclusion and trade opportunities empowers businesses to drive economic transformation and regional integration. The Standard Bank Group remains a strategic partner in our shared vision for economic development on the continent.”

This initiative aligns with the African Development Bank’s Ten-Year Strategy (2024–2033), which prioritises industrialisation, regional integration, and improving the quality of life in Africa.

It also supports Standard Bank’s Sustainable Finance Framework, reinforcing both institutions’ commitment to fostering green and inclusive growth.

“We are proud of this transaction, demonstrating our shared commitment to sustainable financing. By supporting businesses, we create long-term economic opportunities and financial resilience,” said Ahmed Attout, director of the financial sector development department at the AfDB.

Fihla further reaffirmed the significance of the collaboration.

“By providing much-needed capital, we are helping enterprises overcome challenges and thrive. This partnership illustrates the power of collaboration in driving meaningful economic and social change in Africa,” he said.